CSI Resources

diagram of numbers and matrix looking things

4 Components of Modern Sanctions Screening Tools

  • by Michael Brown
  • Feb 23, 2017

Success in a globalized economy is often rewarded with an increasingly complex landscape of rules, regulations and compliance pitfalls. And while such challenges were once the exclusive domain of finance, nearly every industry today finds itself touched by strict requirements to ensure that all transactions and business relationships are vetted against numerous federal watch lists and state regulations.

Sanctions screening is particularly challenging for fast-growing or acquisitive businesses as well as mature organizations that have experienced rapid growth in the past.

Compliance Challenges from Fragmented Business Operations

For these companies, compliance may involve multiple, disparate departments that rely on siloed business applications encompassing multiple customer and vendor datasets. Oftentimes, separate departments and business functions cannot—or do not—communicate, making effective risk management even harder due to the lack of shared data or even a lack of attention to compliance at all. And with each new business function comes a new set of regulatory requirements and the associated risks.

What’s more, newer businesses that have grown quickly may not even be aware that new goods or services offered require screening against watch lists associated with the Office of Foreign Assets Control, the USA PATRIOT Act or the U.S. Treasury Department—in addition to any state regulations that may exist.

For these businesses, a fractured internal compliance process is likely to lead to inefficiency, increased risk and the inability to analyze compliance in a meaningful way.

Instead, a more holistic view should be the goal: an automated compliance solution that seamlessly integrates sanctions screening into their existing technology ecosystem. Such a solution should allow a consistent and comprehensive review system regardless of business function silos and provide a central system of record to ensure data retention and accessibility.

Businesses should have high expectations from a modern sanctions screening system, including these four components:

  1. Real-Time Protection

    As business functions grow and transactions become more sophisticated, increasing importance will be put on real-time transactional screening as a preventative solution, in addition to retroactive screening. Such a system would have the ability to stop a transaction at the point of sale, which is particularly important for businesses that rely on shipping and transport to deliver a product or service. 

  2. Automated Retroactive Screening

    At the same time, retroactive transactional screening remains an integral compliance function for many businesses. Various federal watch lists are updated regularly, requiring the rescreening of transactions at scale. An effective retroactive compliance system should automate re-screening immediately upon receiving watch list updates. Anything less could lead to sanctions problems, or even violations, down the road. 

  3. Centralized, Accessible Records

    A modern sanctions screening system must provide a centralized system of record, accessible across multiple, disparate functions. Such a system should allow for ease of analysis on a holistic level, as well as provide executive, legal and individual compliance departments the ability to access and analyze records through a portal or on their existing systems. 

  4. Highly Customizable
  5. Given the risk management variables among industries and businesses, a sanctions screening solution should be highly customizable to meet the end-user’s specific needs. A solution should be agile so as not to burden clients with bundled services or bloatware that is irrelevant to their industry or specific requirements.

For organizations across all industries, the regulatory landscape is a quickly changing web that presents challenges for ambitious businesses. So, as a company grows, so too does its risk. In order to keep up, sanctions screening must evolve alongside business needs in a way that allows a customized, seamless, holistic sanctions screening process.

In fact, if compliance mandates aren’t met, a successful business that fails to employ an agile, holistic sanctions screening process may find itself hampered by its very own success.

 

Michael Brown is vice president of product strategy for CSI Regulatory Compliance. With nearly two decades of IT and project management experience, he leads strategic product development for a wide variety of risk management solutions. Michael holds several industry certifications, including CAMS Certified Anti-Money Laundering Specialist, PMI-ACP Agile Certified Practitioner, PMI PMP Project Management Professional, and Oracle Certified Associate.